Protecting your cryptocurrency tokens with a hardware wallet

If you’ve been involved with blockchain for even a small amount of time, you may have heard about a so-called “hardware wallet.” What are they for and why would you need them in an “app first” world? It might seem like an extra annoyance to carry around this extra device, but it can be more than just a keychain dongle. That’s right, cryptocurrency hardware wallets are increasing in capability and now offer features beyond “be your own bank.” Ready to learn more? Let’s get started!

Cryptographic Hardware Wallets

Hardware wallets are cold storage devices (and if you don’t know what that means, you need to take a step back and read our Wallets page!) Because cold storage devices are not connected to the internet, they provide greater security for your tokens by being less easily hacked. If you are using coins or tokens as a long-term investment or like a ‘savings’ account, then hardware wallets are what you need for your security!

The very first mass-produced hardware wallet was the Trezor. This device only supported Bitcoin for a very long time, but updates have added support for additional crypto-coins like Litecoin and Zcash. One of the most-loved features of the Trezor was its ability to automatically generate new receiving addresses and ability to recover the device contents in case of loss or theft of the device itself. These “seed phrases” are often made up of 12, 18, or 24 words that can be used to restore a Trezor, including access to all the cryptocurrencies it tracked. How? Check out this Ask an Expert on Hierarchical Deterministic (HD) wallets for more details!

Hardware wallets are cold storage devices (and if you don’t know what that means, you need to take a step back and read our Wallets page!). Because cold storage devices are not connected to the internet, they provide greater security for your tokens by being less easily hacked. If you are using coins or tokens as a long-term investment or like a ‘savings’ account, then hardware wallets are what you need for your security!

The very first mass-produced hardware wallet was the Trezor. This device only supported Bitcoin for a very long time, but updates have added support for additional crypto-coins like Litecoin and Zcash. One of the most-loved features of the Trezor was its ability to automatically generate new receiving addresses and ability to recover the device contents in case of loss or theft of the device itself. These “seed phrases” are often made up of 12, 18, or 24 words that can be used to restore a Trezor, including access to all the cryptocurrencies it tracked. How? Check out this Ask an Expert on Hierarchical Deterministic (HD) wallets for more details!

Hardware wallets offer greater security than software wallets because it is a separate, offline device. It is not connected to the internet until it is plugged into your computer, and encryption helps prevent it from being hacked when it is. So if something happens to your computer or phone, like crashing or theft, your hardware wallet, with your keys and crypto will still be okay (unless you break or ruin it)! You can protect your device with a password too, which is an added layer of security in case of theft. They are small enough to be easily transported and easy enough to use that it makes sending and receiving tokens straightforward and quick.

Land of 1,000 options

Three different hardware wallet devices: KeepKey, Ledger, Trezor (from left to right)

Okay, so we’re not really talking about a thousand actual different options, but the number of hardware wallet devices to protect your blockchain assets is increasing. And that means us consumers will one-day enjoy a wide variety of features and costs to suit most needs. Already today we have cryptocurrency hardware wallets like Trezor, Ledger Nano S, Digital Bitbox, and KeepKey. Beyond that, Jaxx is planning a hardware device and several other options may be in the works.

Which device is best for you? First, you should check which devices support which blockchain assets. Some may only support Bitcoin, while others like devices from Ledger can be expanded for other native assets. As subtokens on Ethereum become more common, we can expect better support for things like Augur, Gnosis Melonport, and other ERC20-compatible tokens. (See the bottom of this page for reviews of hardware wallets)

More than a digital wallet

Did you know that newer hardware wallet devices can be used not only to secure your cryptocurrency and blockchain tokens, but also can be used to secure accounts with two-factor authentication.

Much more secure than receiving a text message on your mobile phone, physical 2FA devices have long been employed by large corporations with secrets to protect. Of course, it’s possible to handle 2-factor with an app on your phone, but you give up some security in the process. If your phone is lost or you fail to back up the 2FA application, you may be left without access to your accounts.

The most secure feature of hardware wallets beyond their encryption and protective features is the fact that it is a separate device from your phone or laptop, which prevents malware or hacking from easily happening. Unless the device is broken, stolen, or destroyed, you are pretty safe!

Lastly, plugging in a hardware wallet into your USB may be a bit easier to use because you won’t have to type (or mistype 😉 any long codes. For these reasons and more, a security device separate from your phone is highly recommended.

Different functions and features

While new features are being tested with each new product, it’s important to remember that simplicity can be especially good for a device that is supposed to protect something potentially valuable. None of the devices currently available are waterproof, but we hope to see that change in the near future. Another aspect to consider is how good your vision is and how a small screen could be a hinderance when confirming information. Lastly, the user interface is something to consider. Most devices these days only have a couple buttons. Some have only 1!

Hardware Wallet Reviews

Our hardware wallet reviews provide you with an idea of how the device works, and pros and cons for different devices. You can find these reviews below! We expand our hardware wallet section as new ones enter the space or old ones are updated, so stay tuned for more!

The Trezor Model T is the hot new cryptocurrency hardware wallet, and we got our hands on one. From its new touchscreen to the quick setup process, to the state of the art security, the Trezor Model T aims to mix ease of use with security.

Protect your cryptocurrency with a hardware wallet! The Ledger Nano S hardware wallet is one we reviewed here. Our blockchain expert, Taylor, goes over important factors to consider for the wallet, and the goods and bads he discovered in using it.